Where’s all our money going? Here are 3 things that drain the money from our accounts without us realizing it:
- The first are auto-payments. It’s convenient to have the money for bills drawn directly from your bank account. And it’s smart when it comes to things like rent, a mortgage or your car insurance payment. Those bills need to be paid on time and they’re necessities. The problem with auto-pay is when it comes to non-necessities, like your gym membership or your Netflix subscription. We can lose a fortune on services we don’t use. For example, most people with a gym membership stop going after 3 months, but continue to pay for a full year. And what about your cable bill? If you’re only paying for HBO to watch The Newsroom – why not just buy the series from iTunes for $29 – instead of paying $120 for a full year of HBO? The lesson is – only auto-pay necessities. Writing a check for luxuries makes you think twice about whether you need them.
- Another money drain is what’s called “lifestyle creep.” Say you were lucky enough to get a raise – but there’s no more money in your account than before the raise kicked in. That’s because we tend to raise our standard of living as our income goes up. Instead, put 80% of any salary increase into your savings. Since you were already living without the extra money, you shouldn’t miss it – and your savings will grow.
- Eating out. Every third meal is eaten at a restaurant these days. And the average middle-class family spends $1,000 dollars more on restaurant meals every year than they spend on food they prepare at home. So, start cooking more meals at home, and save restaurant outings for special occasions. Doing that could save you between $2,000 and $4,000 dollars a year!